A commentary by J. F. Kelly, Jr.
President Barack Obama, who won the presidency on a promise of change, has an ambitious domestic agenda. Trouble is, we can’t afford it. We are already living on credit, relying on foreign nations like China to finance the steadily increasing costs of running our rapidly expanding government.
Mr. Obama added significantly to the national debt he inherited with bailouts of the financial and automotive industries and by a stimulus package which has been of limited value in stimulating a recovery from the recession which he also had the bad luck to inherit.
Now comes the revelation from both the White House Office of Management and Budget and the Congressional Budget Office that the huge projected federal deficit during the coming decade will be about $2 trillion higher than estimated. Over the ten years it will add about $9 trillion to the national debt. Decreased tax revenues attributable to the prolonged business slump and persistent high unemployment could add even more to these deficits.
Understand that we are talking only about yearly deficits, not the total national debt itself. That is projected to amount to over $20 trillion by the end of the coming decade if these estimates hold up and if tax revenues don’t increase substantially.
Writing or saying “$20 trillion” comes too easy. To try to get a handle on the magnitude of that sum, we should be required to write it out with all the zeroes. That would be $20,000,000,000,000. It’s a sum that defies human comprehension and much of it will be owed to foreign nations who may not always have our best interests at heart.
It is unlikely that all of this debt will ever actually be repaid but that is beside the point. The interest on it must be paid. That interest currently consumes about one-eighth of our annual spending. If these projections hold up, it will soon grow to 25%. One out of every four dollars of federal spending will then go to pay interest on the federal debt. Entitlements like Medicare, Medicaid and Social Security will consume much of the rest, leaving less and less for infrastructure, defense and social programs such as those in Mr. Obama’s expansive and expensive domestic agenda.
This will likely result in still more borrowing, just to stay afloat. Tax increases will be inevitable and if the government chooses to monetize the debt away by printing more money, rampant inflation will soon decimate savings and devastate those on fixed incomes. The United States, already a debtor nation, will lose ground rapidly in the competitive global economy to those nations like China who are able to save, invest and control the size and expense of their governments. Our status as a superpower will almost inevitably decline since no country can live beyond its means indefinitely and prosper.
That our politicians are letting this happen is disgraceful. It is their spending that is digging this hole for our children and grandchildren. But politicians today seem motivated mainly by a desire to cling to office and the sense of power that control over others’ money brings. We the voters are not blameless for letting them get away with it, knowing that it is future generations who will pay the price for our extravagance.
What to do? We must somehow make it clear to our representatives that the size of the current deficit ($1.58 trillion), the projected $9 trillion in additional deficits and the growing total national debt is of urgent concern to us. While specific reforms to health care insurance coverage are desirable, primarily focused on helping citizens who, through no fault of their own, are losing or cannot obtain health insurance, we simply cannot afford a costly major overhaul. Nor can we afford expensive alternative energy programs requiring government subsidies or cap and trade carbon emission control programs that impose additional burdens on a still-struggling industrial sector.
It is Mr. Obama’s misfortune that he inherited a fragile economy. He made many campaign promises that helped get him elected and that he understandably wants to keep. Unfortunately for him, we cannot afford them and arguments that we can pay for them by just eliminating waste and inefficiency and taxing the rich are transparently false. They will inevitably require tax increases for the middle class and businesses which will be an enormous additional burden on a recovering economy, increased foreign borrowing and in the case of a major healthcare overhaul, rationing of services and severe reductions in Medicare funding.
Copyright 2009 by J. F. Kelly, Jr.